New and Interesting International Tax Issues

March 16, 2012

International PLRs of the 10th week of 2012

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Last week the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. There were no PLRs or CCAs for the 9th week and no international related PLRs or CCAs for the 11th week.

PLR 201210009: Late Canadian registered retirement savings plan ("RRSP") deferral election. The following is a quote from the PLR:

[The Taxpayer] retired and became eligible to receive benefits from two Canadian pension plans. In addition, [the Taxpayer’s] mother, a Canadian citizen and resident, passed away in Year 3. Because of these two events, [the Taxpayer] started doing independent research on various tax issues and he consulted a local accounting firm. At this point, [the Taxpayer] first learned of the potential tax issues concerning RRSPs, including the need to make an election to defer U.S. taxation on income accruing in an RRSP pursuant to Article XVIII(7) of the United States-Canada Income Tax Convention (the “Treaty”). In an effort to become and remain fully compliant, [the Taxpayer] retained tax attorneys with experience in international issues.

PLR 201210013: Late Canadian registered retirement savings plan ("RRSP") deferral election. The following is a quote from the PLR:

Taxpayer independently learned about the IRS offshore accounts tax compliance initiative by reading a newspaper. Taxpayer performed independent research and became aware of the provision in the Treaty that provides for deferral of U.S. taxation of income accruing in an RRSP until there is an actual distribution of income from the plan. Shortly thereafter, Taxpayer consulted a law firm to confirm his understanding of his U.S. tax obligations with respect to his RRSPs. He was informed that in order to defer U.S. taxation on his RRSPs, an election must be made pursuant to Article XVIII(7) of the Treaty and Rev. Proc. 2002-23. He also was informed about the requirement to file Forms 8891.

PLRs 201210019 and 201210020: Domestic corporations were granted permission to change from the fair market value method to the alternative tax book value method of asset valuation for purposes of apportioning interest expense for their taxable years and for all subsequent taxable years. Temp. Treas. Reg. §§1.861-8T(c)(2) and 1.861-9T(g)(1)(ii).

CCA 201210033: The subject of the email is “6651 applicable to failure to file form 1042?” and the full text of the email is:

An addition to tax is imposed under section 6651(a)(1) for failure to file a return required under the authority of Subchapter A of Chapter 61 (other than Part III) within the prescribed period. § 6651(a)(1). Form 1042 is a return required under the authority §6011, which is in Part II of Subchapter A of Chapter 61. §6011(a); Treas. Reg. §1.6011-1(c); Treas. Reg. § 1.1461-1(b)(1). See Ellwest Stereo Theatres of Memphis, Inc. v. Commissioner, T.C. Memo. 1995-610, at *4; New York Guangdong Finance, Inc. v. Commissioner, 588 F.3d 889 (5th Cir. 2009). Therefore, failure to file Form 1042 will result in a penalty under §6651(a)(1).

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The posts on this blog have not been verified for accuracy. You should consult an attorney for legal advice regarding your own situation. These posts are not updated for changes in the tax laws. Further, these posts should not be relied upon for any purpose whatsoever.